Schley Corporation applies manufacturing overhead to products on the basis of standard machine-hours.Budgeted and actual overhead costs for the most recent month appear below: The original budget was based on 3,200 machine-hours.The company actually worked 3,510 machine-hours during the month and the standard hours allowed for the actual output were 3,660 machine-hours.What was the overall variable overhead efficiency variance for the month?

Question

Schley Corporation applies manufacturing overhead to products on the basis of standard machine-hours.Budgeted and actual overhead costs for the most recent month appear below:  The original budget was based on 3,200 machine-hours.The company actually worked 3,510 machine-hours during the month and the standard hours allowed for the actual output were 3,660 machine-hours.What was the overall variable overhead efficiency variance for the month?

Quizplus · Accepted Answer

SR = $26,240 ÷ 3,200 hours = $8.20 per hour
Variable overhead efficiency variance = (AH - SH)× SR
= (3,510 hours - 3,660 hours)× $8.20 per hour
= (-150 hours)× $8.20 per hour
= $1,230 F

Schley Corporation Applies Manufacturing Overhead to Products on the Basis